Trustco Bank Mortgages: BiggerPockets Review

By Mindy Jensen

May 27, 2020

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Trustco Bank, headquartered in Glenville, NY, is on the small side, comparatively: It has just under 150 locations, mostly in the state of New York. Its other locations are found in Florida, Massacheutts, New Jersey, and Vermont.

Trustco received a savings bank charter in 2000, and quickly began expanding. In 2003, it opened an Orlando branch, and over the next ten years it more than doubled its branch office footprint. The bank has grown its assets from $1.9 billion in 1992 to $4.3 billion in 2012, now topping $5.3 billion as of 2020.

The bank focuses on residential mortgages, calling itself “Your Home Town Bank.” Trustco offers mortgage, refinancing, and home equity lines of credit (HELOCs). It also runs a program for first-time homebuyers.

Quick facts

Trustco has a robust banking suite, including auto and building loans, as well as investment accounts and student loans. However, they have a limited footprint—just five states.
Quick and easy online mortgage application process, with an application that saves the data along the way.
The bank focuses on residential loans and homeownership, covering mortgages, refinance loans, and home equity products.
They keep costs low on mortgages, including low closing costs and no tax escrow. They have lender-paid PMI for loans with 89.5 percent or higher loan-to-value (LTV).

Pros

Trustco has a convenient online mortgage application, with the entire process being able to be completed online.
The bank will do a home equity line of credit (HELOC) on an investment property.
Trustco doesn’t require the borrower to pay PMI, with the PMI being paid by the bank.
They have the “Hometown First Time Home Buyers Program,” which offers low down payment financing options and can be used for owner-occupied rental properties.

Cons

Does not offer government-insured loans—i.e. you can’t get Federal Housing Administration (FHA), Veterans Affairs (VA) or United States Department of Agriculture (USDA) loans from Trustco.
The HELOCs are limited to less than $300,000, with LTV going up to 80%.
Limited footprint, where they only lend in counties they have a branch.

Mortgage products

Trustco offers the major mortgage products you’d expect from a local bank—notably, the 30-year fixed-rate loan. It also offers programs for first-time homebuyers, which require minimal down payments—sometimes as low as three percent. Trustco also offers other “low” down payment 30-year fixed rate loans, including five and 10.5 percent down.

The bank also offers 15-year fixed rate mortgages, as well as 30-year jumbo mortgages, with a required down payment between 15.5 and 20 percent. In addition, there are mortgage refinancings and a second-home loan, which offers 30-year repayment terms and requires an 80 percent LTV. This loan can be used for rental homes.

Trustco also offers home equity loans and home equity lines of credit (HELOCs). In fact, Trustco gets plenty of praise for its HELOC program. Its home equity loan can be either a first or second lien, and can amount to $5,000 to $300,000. Typically, their HELOCs with a one-year introductory rate. The amount of their HELOC can be $7,500 to $300,000. There are no appraisal or origination fees for the credit line. Financing on their HELOCs can go up to 80% LTV.

Of note, Trustco does not offer government-insured loans, such as FHA, USDA, or VA loans. However, for all its mortgages, it claims low closing costs, no points and no borrower-paid PMI—that is, Trustco will pay PMI on loans with 89.5 percent loan-to-value (LTV) or higher.

Then there’s Trustco’s “Hometown First Time Home Buyers Program.” This program offers 95 percent financing, with a loan amount up to $550,000. There are no appraisal fees and reduced application and closing costs.

Trustco Bank and real estate investors

Good news for potential real estate investors: That Hometown First Time Home Buyers Program can be used for owner-occupied residential properties of up to two units—so first-time buyers looking to jump straight into investing have a leg up.

Trustco gets high marks and praise from real estate investors for its HELOC program. The list of banks that will do a HELOC on a rental property is limited, but Trustco makes that list. Additionally, the bank will finance three- and four-unit properties with just 10.5 percent down, said New Jersey rental property investor Sunny Burns. For single-family homes and duplexes, it offers loans for just five percent down with low closing costs and competitive interest rates.

As well, Trustco will also consider rental income not on previous tax returns, but instead based on signed leases, Burns added. The majority of other banks will only consider rental income if it's based on tax returns from the last two years. “They're very investor friendly,” said New York rental property investor Dylan Mejo.

Trustco Bank mortgage rates

Trustco Bank offers different mortgage rates for different parts of the country. For Miami, for instance, a 30-year fixed rate mortgage is 3.415 percent. The bank’s 15-year fixed-rate note offers an average rate of 3.196 percent, while the national average is 3.16 percent. Trustco’s jumbo mortgage rates for 30-year fixed-rate is 3.51 percent, while the national average is 3.75 percent.

The current (as of May 2020) average rate for Trustco’s HELOCs is 4.75 percent, a fair bit below the national average—and with a much-lower introductory rate for the first year.

Home equity loan rates from Trustco are 3.75 percent for first-lien loans and 4.5 percent for second-lien loans, while the national average is 5.34 percent. Both of these assume 10 percent equity and up to $300,000.

All of Trustco’s rates include a 0.125 percent discount for autopay.

All of Trustco's rates assume a 10.5 percent down payment and borrowing up to $550,000. However, Trustco offers 95 and 97 percent LTV loans, with correspondingly higher rates.

Investors will appreciate their low rates for single-unit rental properties, second homes, vacation homes and weekend homes: an average of 3.916 percent for a 30-year loan up to $550,000.

Application process

While Trustco and many banks don’t publicly lay out what they look for to approve a mortgage, they do say they're looking for a solid borrower, avoiding those with serious credit issues. Ideally, a borrower looking to get a loan from Trustco will need a credit score in the low 600s, at a minimum.

In terms of the actual mortgage process, it can be done entirely online. However, if you're a face-to-face kind of person, in-person applications can be done with a loan officer at one of its locations in the five states it operates within. After putting in an application, the loan is processed, additional documentation is requested, and an appraisal is ordered.

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